Starting in 1996, the Bank of Canada began adjusting the relative amounts of Government of Canada treasury bills and bonds held on its balance sheet to more closely approximate the proportions of outstanding government debt. This adjustment involved an increase in the Bank's participation at bond auctions and reduced participation at treasury bill auctions. Since June of that year, the Bank has announced on each bond Call for Tenders the minimum amount that it would acquire.

As announced in the 2003 federal budget and the 2003/04 Debt-Management Strategy, the government intends to decrease the proportion of fixed-rate debt outstanding from two-thirds to 60 per cent by 2007/08. A modest realignment of the Bank of Canada's balance sheet will be needed over the same period to ensure that it continues to reflect the proportions of outstanding debt. The adjustments will involve a decrease in the Bank's participation at auctions of 10- and 30-year bonds and an increase in its participation at treasury bill auctions. The changes, effective 1 October 2004, are for balance-sheet purposes only and have no implications for monetary policy.

The Bank will continue to indicate its minimum purchase intentions on the Call for Tenders for each nominal bond offering. The Bank's maturing bond holdings, if any, will also be published.

For further information, please contact:

Donna Howard
Deputy Chief
Financial Markets Department
Bank of Canada
613 782-8474
Marc Pellerin
Principal
Domestic Debt Management
Bank of Canada
613 782-8429